Resolution Foundation event: Escaping low pay

Author:

Chris Mould

I enjoyed the Resolution Foundation’s Escaping Low Pay event last week. The contributions were suitably thoughtful – politically balanced of course - but still sufficiently challenging and stimulating to keep me engaged and on my toes, literally on my toes, in a standing room only venue. The research conclusions were full of food for thought. And as usual with the Resolution Foundation underpinned by highly credible methodology.

But I left dissatisfied. I’m a solutions man and I wanted answers to the “What do we do about it?” question. The subtitle for the event was “How to break away from in work poverty”, so I don’t think I was being unreasonable.

Alan Milburn, Chair of the Social Mobility Commission ably made the case for the problem of low pay to be on any serious policymaker’s to-do list as people gear up for 2015 and beyond. “Low paid work is now a bigger problem in Britain than the lack of work”, he said. Structural changes have ossified the lower end of the labour market. Public policy has failed to keep up with the change: eyes have been on the old ball, unemployment, without enough attention being paid to the new problem. There’s a real and pressing absence of policy levers to address the issues thrown up by low pay.

“The road has run out for the old approach of asking tax payers to subsidise employers. We need to see a more even sharing of the burden”, he said. I agree with that, but where is this line of argument going I wonder, as next we hear “we must ditch the old assumption that the economy will do the heavy lifting” and, again, that many of the current proposals for reducing welfare spending will do nothing to reduce poverty or increase social mobility? I agree with that conclusion too, indeed with each statement taken in isolation. But I’m feeling increasingly gloomy and I’m still waiting to hear someone offer a solution or two. There’s inconsistency somewhere.

Other contributors followed Alan Milburn, adding to the value, filling out my understanding of the issues, but they didn’t really give much insight into the solution either: how to break away from in-work poverty, how to reverse the widening of the gap in the two tier economy.

And, we all know that really matters.

If people in low-paid work are four times more likely to have a heart attack than the rest of the workforce; if people in low-paid work are significantly more likely to suffer from stress related illness; if wage compression means people in low-paid work turn down opportunities for career progression because the rewards in terms of additional pennies per hour are simply not worth all the extra responsibility and associated loss of personal flexibility; if this in turn means employers’ investment in their people is frustrated and the smooth management of their operations up-ended; if all this is true, we most definitely need to know how to break away from low pay.

The costs can’t be ignored.

That means taxpayers may need to think again about subsidy. And employers may need to think again about heavy lifting. But from our perspective it also means we will have to develop a whole range of options to replace the missing rungs on the proverbial career ladder, for how else will low-paid people climb up and break away from in-work poverty?

And one thing becomes abundantly clear: we need fresh policy propositions that reject the commodification of people on low pay - easily replaceable and lacking personality – and instead value them as individuals, giving them the opportunities to build the social and human capital they need to get out from the low pay ghetto. And that needs the elites, in business, policy and government, to work together.